Home and Living Daily Tips

Posts Tagged ‘Coverage Policy’

When you want your insurance policy to give you more coverage options than intended initially, you go for extras. Because life coverage policy is like a suit – you have to make it fit you, otherwise there’s no point in wearing something that’s uncomfortable. And like when you go to the tailor, to make your suit fit, you buy extras and raiders to make the policy fit your insurance needs perfectly.

But what is a rider in the first place?

Legally speaking, a rider is a document containing certain provisions that are not included in the initial policy, and which are to be enclosed to the present policy when signed. But don’t think that it will cost you much, because the majority of riders are inexpensive compared to the initial prices of the policy. They require less underwriting and thus come with a reasonable pricing while providing coverage in cases you think are important for you.

Insurance companies offer a wide range of raiders designed to cover a variety of situations and circumstances. Some of these riders are best suited for term policies, while others are designed specifically to be included into continuous policies. Here are some of the most popular riders you might think about getting from your company.

Guaranteed insurability

Also referred to as “future purchase option,” this type of rider is only available for purchase with your continuous life coverage policy. It provides you with a possibility to get additional coverage when reaching a specific age without the need to prove your insurability. This often comes in handy when there are changes in your life like marriage, child birth, change of job, etc.

Waiver of premium

In case you are unable to work due to serious injury or disease, paying for life insurance can become quite problematic. This rider will pay your insurance premium if you become disabled or seriously sick without a steady source of income.

Additional family member

This is a great way to get cheap life insurance for your family while still having everybody covered adequately. Instead of buying stand-alone policies or including your family members to your permanent insurance policy, which will be quite costly, you can purchase this rider, which is a form of term coverage, and get the coverage you need for a far lower price.

Accidental death

Also referred to as “double indemnity,” this rider will pay out double the coverage amount of your policy if you die because of an accident. It is especially important if you have a high risk of having an accident at your work.

Living benefits

This rider will pay out a part of your benefit when you are still alive should you develop a serious illness or injury that will require long time care or nursing. The benefits will of course be adjusted accordingly, but the rider gives you and your family the necessary financial support during the tough period.

Conversion term insurance

This is a great option for those who don’t have the money for a continuous policy right now but would like to use its benefits in the future. When you purchase this rider with your much cheaper term insurance policy you reserve the right to convert it into a continuous one when you have the money for it, without having to buy a new policy.

When looking for riders, shopping around also works great. Remember to get life insurance quotes on the riders you would like to purchase and go with the most competitive offers.

Term insurance: simple and affordable

When it comes to comparing different types of insurance policies for covering your life term insurance policies turn out to be the most simple and inexpensive. If your insurance needs don’t require sustaining a policy for your entire life, you may find it very appealing to get a term policy especially with the price tag being times smaller than of continuous policies.

Why term policies are the cheapest option for life coverage?

Term insurance policies will cover you only for a specific period of time. They also usually have pre-set premiums and fixed amounts of benefits to receive. Term policies can last from one to 30 years, but the most popular options are 10 and 20 year term policies. The vast majority of these policies cannot be renewed and the chances for the insurance company to pay out death benefits on term coverage policy are minimal. In fact, only about 1% of all term insurance policies actually give out a death benefit to their clients. That’s why the insurance company can place a significantly lower price tag on such a product.

Why taking term insurance coverage?

Term insurance policies are aimed at covering certain types of debts in case the policyholder is disabled or dies. Some debts that term insurance coverage may pay for include:

• Consumer credits
• Mortgage loans
• College education for children
• Funeral expenses

That’s why people who get 30-year mortgage deals are looking for 30-ear term life insurance policies. The most widespread options in terms of policy duration are those of 10, 15, 20, 25 and 30 years. Short-term policies are also available but they are rarely purchased.

Types of term insurance policies

Decreasing term insurance policies, also referred to as mortgage insurance policies, have a fixed premium over the entire term, however the death benefit is constantly decreasing with the time passing, being often connected to your mortgage debt. And as you pay out your mortgage, your insurance amount is decreased respectively. Insurance experts are not very enthusiastic about this type of policies although it’s a cheap life insurance option. But keeping in mind the low percentage of death benefit payout there’s not much sense in having such a policy.

Other types of term life coverage include:

• Burial insurance: such small insurance are aimed only for covering funeral costs.
• Group term insurance coverage: suitable for enterprises as it is designed to cover more people than standard policies.
• Specified age term insurance: such policies provide coverage only until the policyholder reaches a specified age.
• Return of premium: such policies will reimburse a part or all the premiums you have paid during the term if a claim is not filed. However, the premiums with such policies are usually higher.

Although, term life coverage is a relatively inexpensive compared to other types of insurance, your policy can still cost you much in premiums if you don’t take some time and shop around for a good policy. There are numerous insurance companies providing term insurance policies, and the rates can differ significantly for the same type and amount of coverage. That’s why it really pays off shopping around and getting as much life insurance quotes as you can, in order to find the perfect term insurance policy to purchase. Be smart, and don’t get the first policy you are offered with as there may be numerous offers way better than that.

Reasons for not canceling your life insurance policy

When facing economical downshift, it can be quite tempting to minimize costs by refusing certain things you might feel as useless or luxury. However, insurance should be amongst these things. Having your life insured may look like a loss of money now, but when the moment comes it can be a great deal in sustaining and supporting your spouse and children from the financial point of view.

If have your life insured, having your policy cancelled can turn into a big mistake from the financial point of view in the long run. Of course, it is very hard to resist such a temptation when having to pay high premiums that do you no favor in means of lowering your expenses. But you have to see the whole picture rather than concentrating on details. The following are six important reasons for refusing to cancel your life coverage policy.

1. Insuring your life is an investment.

When people choose to insure their lives they provide a valuable investment to their loved ones that can be used after certain circumstances. Of course, it’s very hard to grasp the situation when you are gone and the relevance of your needs, but think about your family. Losing a key person will lead to serious hardships that will affect the financial situation of your spouse and children as well. And when you insure your life you ensure that your loved ones won’t be experiencing financial problems.

2. Life insurance premiums have already been paid.

This will sound as the most logical reason for those who are thinking about the “now” situation. Just think of all the premiums you have already paid. This especially refers to those who had their policies for a while now. Unless you have special types of insurance policies, all the premiums you have already paid will simply turn into a waste of money.

3. You can raise the cash value of your policy with time.

In case you have universal or variable life coverage policies, you probably know that they are typically financed through mutual funds. And if the funds increase, so will the cash value of your policy, which will definitely be a nice feature for you and your family.

4. Some policies allow you to skip premium payments.

Some types of universal insurance policies will allow you to skip a certain amount of premium payments after a specified period of time. And when facing financial hardships it may be wise to use that option. Such policies aren’t typically associated with cheap life insurance options but in the long run you get more benefits when using them.

5. Lower the coverage amount to reduce the premiums.

The premiums you will pay are directly related to the amount of coverage carried by your policy. If you lower the coverage amounts your premiums will go down respectively. However, keep in mind that reducing the coverage amounts below a certain point will make your policy senseless, because it won’t be able to meet your insurance needs when the moment comes. Define the minimum required amount of benefits to be received and go on from there.

6. Finding good life insurance quotes will be tough in case you cancel.

If you decide to cancel your current policy now and find another one after some time you may be surprised to find out that your rates will be much higher than with your initial policy. Insurance companies tend to give higher life insurance quotes to those who have cancelled their policies before end of term, and you will probably be older when getting the new policy – a factor that also strongly influences the final rates.